Debt Settlement

February 5th, 2011 by Questions

My credit is not perfect, but it\’s not awful. I have about 20, 000 of credit card debt and never seem to be able to make a dent in it. I have been considering a debt settlement or credit counselling, but I was wondering how this would affect my credit?

Posted from: Ontario


One Response to “Debt Settlement”

, A licensed trustee said:

Debts settlements, credit counseling and consumer proposals are all shown in the same way on yoru credit bureau report – the debts will be rated at an R7 (or higher) until the payment plan is complete, then a warning will stay on your record for three additional years.

A word of caution – many (if not most) of the debt settlement companies are little more than scam artists. They do not provide any legal protection to their clients and they are not regulated in anyway. The most common scam is to advertise that they can reduce your debts by up to 70% and then after you’ve paidf thier fees they refer you to a licenced trustee in bankruptcy to file a proposal.

Before you commit to any debt settlement plan make sure you understand exactly what is happening with your money and who is going to contact your creditors to deal with your debts.

Credit counselling is desgined for people that can afford to repay their debt sin full, but need relief from the interest.

Consumer proposals are designed for people that can only afford to repay a portion of their debts.

So, when you are tryig to decide which option makes the most sense for you – start with your monthly budget. If you can afford to repay the debt in full then you should be seriously considering credit counseling. If you cannot afford to repay 10% of your debt then you should be considering a consumer proposal.

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